The Supreme Court on Friday declined to intervene in a National Company Law Appellate Tribunal (NCLAT) order that had set aside a Rs 301 crore penalty imposed by the Competition Commission of India (CCI) on Grasim Industries Ltd in an alleged abuse of dominance case related to the viscose staple fibre (VSF) market.
A Bench comprising Justices JB Pardiwala and K Vinod Chandran dismissed the CCI’s appeal against the NCLAT decision, which had cancelled the penalty and directed the competition regulator to reconsider the matter after providing Grasim an opportunity for a fresh hearing.
The dispute originated from a CCI order dated March 16, 2020, in which Grasim was held to be a dominant player in the market for supplying VSF to spinners in India.
The regulator had concluded that the company misused its dominant position by allegedly imposing unfair and discriminatory pricing practices and additional conditions on buyers.
The CCI had directed Grasim to stop such practices, avoid seeking VSF consumption details from buyers, introduce a transparent and non-discriminatory discount policy, make the policy publicly available and refrain from placing restrictions on the end-use of VSF purchased by customers.
The company challenged the CCI order, arguing that it was issued without providing adequate opportunity to respond. Grasim also pointed out that the Director General’s investigation report had not found non-disclosure of pricing or discount policies to be a violation of competition law. The report had also stated that Grasim was not obligated to continue supplying VSF to traders.
However, despite the DG’s findings, the CCI imposed directions requiring Grasim to disclose its discount policy publicly and allow buyers to use VSF for trading or other lawful purposes without restrictions.
The NCLAT observed that the CCI’s final directions differed from the findings of the DG report. It held that principles of natural justice require the CCI to provide notice and an opportunity for hearing when it intends to disagree with the investigation findings.
The tribunal also referred to the amended provisions of the Competition Act, including the proviso to Section 26(9), which came into effect from September 19, 2024, requiring a show-cause notice before passing final orders.
Following the Supreme Court’s decision, the CCI will now have to conduct a fresh hearing and examine the points of disagreement with the DG’s report before taking a final decision on the matter.
